Sir Pipsalot's Monday Market Update 03-29-2010

Former FPA Special Consultant

Well, Friday saw continued EUR/USD retracement higher following the momentum shown throughout the European session on. Any momentum following buy trade Friday as I recommended should have either seen profit taken Friday, or if you held over the weekend we got an even stronger jump higher.

Right now, 1.3475-85 is a key level of resistance that shows a confluence of multiple fib lines on multiple timeframes. We tested that early Sunday evening and sold off hard so far. Any further retest should be a decent selling opportunity as long as you use a tightish stop for good risk/reward. This retracement phase is likely to top out in the 1.3480 to 1.3610 region before continuing the downtrend, so there's still some room to rally before this thing is done (currently 1.3425). It looks like we can follow the momentum around playing the Euro either way for now. I'd be willing to put a longer term short back in play on EUR/USD in the mid 1.3550's with a 50-100 pip SL as well.

It seems as though the initial reaction to the Franco-German backstopping of Greece's debt auctions along with IMF support has been Euro positive so far. Fundamentally, I anticipate this wave of short covering sentiment to continue somewhat, but likely sputter out sometime this week or next week into more of a long term selloff. The big boys aren't seeing this as good news, just a lot of the piggy-backers who followed along short over the last month or so. Most of the big players realize the whole thing is FUBAR'd long term no matter what action is taken.

On stocks, we saw a bit of retracement Friday, but not much and we're still in that 1160-1170 sell range (1166 currently and I sold around 1162 on ESM0). 1159 is becoming a more and more important area, and once that breaks we should see a lot of selling momentum to the downside. If 1159 fails to break and we set new highs clearly above 1175, the short setup is somewhat shot and it's time to reevaluate.

In news Friday, news generally came out too close to expected for any trades off economic numbers, and there's no news set for release on Monday.

That's all for today's update. If you'd like to learn more about trading or trade along with myself and my collegues, come join us at Profit Mongers. Our subscription is very reasonable at $179 per month, and right now you can sign up for a 2 week trial to get started for only $29. This offer is for new customers only. If you have any questions, you can also email me at sirpipsalot@profitmongers.com

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